I think the market will belatedly realize where rates are, bid the stock up, and belatedly realize that rates are levelling off. We may see this happen in the next couple weeks if we are lucky. The markets get thin after today and it is likely things will flop around in an exaggerated fashion.
All that said, if we have entered a new era of higher tanker rates, NNA could be a $10 stock.
Surprised nobody has commented. Personally, I am happy to see NNA start putting some longer term charters in place as rates have strengthened. I would like to see more profit sharing charters, but it is hard to be disappointed with a 3 year deal at the strongest rates for period work in a long time.
No whining that they are giving up great spot rates to term out? Perhaps investors have learned their lesson after the dry bulk debacle.
That isn't how the floating storage trade works. It is possible that a few lunatics may do what you suggest, but that does not drive utilization of ships for storage in a big way. Instead, what drives traders to rent tankers is the ability to buy oil for $X/bbl, rent a tanker for 6 months for $Y/bbl, and sell forward the same oil today for $X+Y+Z/bbl and make a largely riskless profit.
I know everyone is fixated on crude, but the clean side is taking off as well. Is everyone just ignoring this?
There is nowhere near enough contango to cause storage to start being attractive. Over the next year the widest price difference from Jan futures is a year out and it is only 4 bucks a barrel. Storage costs would be in the ballpark of $10 a barrel. Obviously the shape of the curve can change, but at the moment storage demand is just a twinkle in some analyst's eye.
Actually, Audio understands shipping very, very well. It isn't wise to listen to everything anyone says uncritically, but I give anything audio says a listen even if I do not agree.
Hold on a second. As I understand it, a lot of spot business is paid for on the basis of $x per load from point to point. If the owner does not hedge their bunkers, a drop in fuel price falls to the bottom line, no? Now I would be surprised if owners did not hedge their bunkers, but...
Yeah, I looked at the futures curve again today and contango is not there. One can always wish upon a star, but who knows?
Does anyone but the Chinese know how much is in the strategic reserve? Or is it a state secret/prone to buggy data? A VLCC moves something like 2MM barrels, another 80MM barrels to fill is not an insignificant amount of incremental volume, but it is only 40 VLCC loads.
The question is whether crude trade is being altered by the price war in a material way. More cargos for seaborne middle eastern oil for now as they flood. Perhaps even after they scale back, middle eastern oil will have more prominence as other production will have been curtailed. Nobody knows, I suspect. Best hope for 6 months of strong tanker rates so the retail hordes can come in.
Hmmm, I have not looked at them in a long time. They have really matured. When I last looked they were a long way away from their massive pile of newbuilds being financed, paid for and delivered. Looks like they are about there with an on-the-water fleet and the money is in hand to do what they need to do. I will have to sharpen the pencil and take a closer look. The pools their ships are in are mostly spot, right? If so, I will add them to the list. I bought some TNP today since it did not go crazy like DHT and TNK. STNG actually slumped a bit today, so I may be nibbling tomorrow.
It is amazing that none of the analyst estimates for Q4 earnings have been updated to reflect the surge in tanker rates for pretty much any of the public companies. Are they waiting for the new year?
NAP is just a handful of ships, so figure out NAV and take it from there. I cut to the chase and just own a bunch of NNA since that way I get both. My read is that NAP will be the funding vehicle for tanker equity raising going forward, so I would rather own NNA than the thing that will eventually pound out a ton of new shares.
You would think that in a reasonably liquid market where other tanker owners are running up like mad there would be sufficient interest on the other side of the trade to counteract that. Ah well, I guess it is back to waiting patiently for the market to get a clue.
For those of you playing at home, it appears analyst estimates have not budged for NNA for Q4. At 80k for VLCCs and 40k for MRs, LRs and Chemical tankers (roughly current rates), I estimate NNA would earn profit sharing and excess earnings from spot VLCCs above 25k (what I assume would be a base case before the surge in rates started) of something like $55MM per quarter or something like 35 cents per share. I very much doubt that is reflected in a $3 share price, especially if these kinds of rates are more like an annual average for the next year.
WTH? TNK and DHT and FRO and... spiking like crazy all day and NNA still cannot buy a sustained bid. Anyone paying attention to where TCE is for everything NNA owns and has on spot, index charter, or profit-sharing charter? Bueller?
STNG scares me for a number of reasons, but it is not the MRs. Don't know if you have noticed, but MR rates have spiked very nicely along with dirty rates. If you are trading trans-Atlantic there are very nice TCE rates on offer. Every MR that NNA has with a profit sharing charter is getting good profit share right now.
TNP, DHT and TNK are on my radar as of now. Already own a ton of NNA. Problem with adding the other three is I absolutely hate buying into rallies, so I suppose I will watch for dips and air pockets and try to snipe if they show up. Not looking to add another "cargo-sized" trade, just want more exposure to the sector with a name other than NNA (full up to my limit on that one).
My view is that we are in for at least 6 to 12 months of good times for crude and product tankers on a fundamental basis. With Barron's starting to broadcast the story, more and more traders and retail types will be looking to jump on the bandwagon. With any luck, they will get excessively enthusiastic and overbid these names some time in the next year.
Aside from DHT, who else is out there? What US listed tanker owners are out there that have significant spot/index-linked/short term charters and a balance sheet that is not "coyote ugly?"